SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 33-83116
ASSOCIATED BUSINESS & COMMERCE
INSURANCE CORPORATION
(Exact name of Registrant as specified in its charter)
FLORIDA 65-0496132
------------------------------ -------------------
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
4700 NW BOCA RATON BOULEVARD, SUITE 400, BOCA RATON, FL 33431
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (561) 997-0708
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(b) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of the outstanding Preferred Stock held by nonaffiliates of the
Registrant on November 7, 1996 was 249,716 shares.
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATED BUSINESS & COMMERCE
INSURANCE CORPORATION
TABLE OF CONTENTS
<S> <C>
Part I. Financial Information
Statement of Operations (unaudited), three months and nine months ended September 30, 1996............3
Balance Sheets, September 30, 1996 (unaudited) and December 31, 1995..................................4
Statements of Changes in Stockholders' Equity, nine months ended
September 30, 1996 (unaudited) and the year ended December 31, 1995................................6
Statement of Cash Flows (unaudited), nine months ended September 30, 1996.............................7
Notes to Financial Statements (unaudited) ............................................................8
Management's Discussion and Analysis of Financial Condition and Results of Operations................13
Part II Other Information
Item 1. Legal Proceedings.........................................................................15
Item 2. Changes in Securities.....................................................................15
Item 3. Defaults Upon Senior Securities...........................................................15
Item 4. Submission of Matters to a Vote of Security Holders......................................15
Item 5. Other Information.........................................................................15
Item 6. Exhibits and Reports on Form 8-K.........................................................15
Signatures........................................................................................16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
STATEMENT OF OPERATIONS FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
UNAUDITED
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1996
------------ ------------
<S> <C> <C>
Revenues:
Standard premium earned, net of discounts $ 7,946,489 $ 21,587,766
Less premium ceded for reinsurance 5,302,634 15,099,101
------------ ----------
Net premium earned 2,643,855 6,488,665
------------ ----------
Less loss and loss adjustment expenses 1,402,347 3,842,383
------------ ----------
Premiums available for operations 1,241,508 2,646,282
Earned premium LPT transaction 79,477 324,513
Interest earnings 180,082 649,861
----------- ----------
1,501,067 3,620,656
------------ ----------
Policy acquisition and other underwriting expenses 1,333,250 3,169,839
------------ ----------
Income before income taxes 167,817 450,817
Income tax expense 138,297 234,297
------------ ----------
Net income $ 29,520 $ 216,520
============ ===========
Earnings per common share and
common share equivalent $ 0.29 $ 1.68
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
BALANCE SHEET
SEPTEMBER 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
ASSETS
------
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- ------------
(UNAUDITED)
<S> <C> <C>
Investments with fixed maturities $ 9,751,896 $ 14,439,231
Cash and cash equivalents 2,311,149 2,242,245
Premiums receivable, less allowance for
doubtful accounts 1996 $1,033,059; 1995 $613,125 5,599,393 4,849,556
Reinsurance and related recoverables:
Paid loss recoverable 403,700 94,598
Loss and loss adjustment expenses 18,258,957 14,471,111
Prepaid reinsurance premiums - 530,957
Advances receivable 344,692 175,832
Accrued investment income 114,336 211,277
Prepaid expenses 260,846 1,821,000
Deferred income taxes 930,000 1,084,000
Deferred policy acquisition costs 412,544 389,737
Equipment, less accumulated depreciation
1996 $66,294; 1995 $4,837 632,684 289,871
Other assets, net 78,461 101,202
------------ ------------
$ 39,098,658 $ 40,700,617
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
BALANCE SHEET - CONTINUED
SEPTEMBER 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
RESERVES, LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, December 31,
1996 1995
-------------- -------------
(Unaudited)
<S> <C> <C>
Reserves for losses and loss adjustment expenses $ 25,612,542 $ 28,306,416
Liabilities:
Accounts payable and accrued expenses 4,071,218 2,709,469
Unearned and return premium payable 3,056,013 2,346,983
Deferred gain on loss portfolio transfer 436,365 760,878
Accrued income taxes and special tax deposits -- 1,078,200
----------- ---------
7,563,596 6,895,530
Commitments and contingencies
Total reserves and liabilities 33,176,138 35,201,946
Stockholders' equity:
Convertible preferred stock series A, 6% cumulative,
$1 par value, authorized shares 1,900,000; issued and
outstanding 246,935 shares (aggregate liquidation
preference of $2,469,350 at September 30, 1996) 246,935 221,805
Additional paid - in capital, preferred series A 2,222,415 1,996,245
Convertible preferred stock series B, $1 par value,
authorized, issued and outstanding 3,200,000 shares 3,200,000 3,200,000
Common stock, $1 par value, authorized 15,000,000
shares; 102,501 shares issued and outstanding 102,501 102,501
Retained earnings (deficit) 150,669 (21,880)
------------ ------------
5,922,520 5,498,671
------------ ------------
$ 39,098,658 $ 40,700,617
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 5 -
<PAGE>
<TABLE>
<CAPTION>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
THE YEAR ENDED DECEMBER 31, 1995
ADDITIONAL
PAID-IN
PREFERRED STOCK CAPITAL RETAINED
--------------- PREFERRED COMMON EARNINGS
SERIES A SERIES B SERIES A STOCK (DEFICIT)
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $ -- $ -- $ -- $102,501 $ (10,245)
Preferred stock issued
for cash 221,805 3,200,000 1,996,845
Net (loss) (11,635)
-------- --------- --------- -------- -------
Balance, December 31, 1995 221,805 3,200,000 1,996,845 102,501 (21,880)
Preferred stock issued
for cash (Unaudited) 25,130 225,570
Dividends to preferred
stockholders (Unaudited) (43,971)
Net income (Unaudited) 216,520
--------- ----------- ---------- -------- ---------
Balance September 30,
1996 (Unaudited) $ 246,935 $3,200,000 $2,222,415 $102,501 $ 150,669
========= =========== ========== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements
-6-
<PAGE>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
OPERATING ACTIVITIES
Net income $ 216,520
Adjustments:
Change in net insurance reserves (6,790,822)
Change in premiums receivable (749,837)
Accrued income taxes (1,078,200)
Other 4,188,224
----------
Net cash and cash equivalents
(used in) operating activities (4,214,115)
----------
INVESTING ACTIVITIES
Proceeds from investment maturities and sales 4,630,620
Payments for other assets, net (1,800)
Purchase of equipment (384,270)
Payments of advances, net (168,860)
----------
Net cash and cash equivalents
provided by investing activities 4,075,690
----------
FINANCING ACTIVITIES
Payment of preferred dividends (43,971)
Proceeds from issuance of preferred stock 251,300
----------
Net cash and cash equivalents provided
by financing activities 207,329
---------
Net increase in cash and cash equivalents 68,904
Cash and cash equivalents, beginning of period 2,242,245
-----------
Cash and cash equivalents, end of period $ 2,311,149
===========
The accompanying notes are an integral part of these financial statements.
- 7 -
<PAGE>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
UNAUDITED
NOTES 1 - BASIS OF PRESENTATION
The financial information presented as of any date other than December
31 has been prepared from the books and records without audit.
Financial information as of December 31 has been derived from the
audited financial statements of the Company, but does not include all
disclosures required by generally accepted accounting principles.
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles.
These financial statements rely, in part, on estimates. In the opinion
of management, all necessary adjustments have been reflected for a fair
presentation of the results of operations, financial position and cash
flows in the accompanying unaudited financial statements. The results
for the period are not necessarily indicative of the results to be
expected for the entire year.
Reference should be made to the "Notes to Financial Statements" on
pages F - 8 through F - 22 of the registrant's Form 10 - K for the year
ended December 31, 1995. The amounts in those notes have not changed
except as a result of transactions in the ordinary course of business
or as otherwise disclosed in these notes.
Some figures in the 1995 financial statements have been reclassified to
conform with the 1996 presentation. These reclassifications have no
effect on net income or stockholders' equity, as previously reported.
Comparative results of operations and cash flow information is not
presented because the registrant did not begin insurance operations
until December 1995. Activity until that time was limited to
organizational activities.
NOTE 2 - INVESTMENTS
Investment activity for the period ending September 30, 1996 consisted
of the collection of maturities, early call proceeds and proceeds from
the sale of certain available for sale fixed maturity securities, which
totaled $4,630,620. The market value of the Company's available for
sale fixed maturity securities continued to approximate amortized cost;
accordingly no provision for appreciation or depreciation in
investments is recorded in stockholders' equity.
-8-
<PAGE>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
UNAUDITED
NOTE 3 - EARNINGS PER SHARE
Earnings per common share were calculated by dividing net income by the
adjusted average number of common shares outstanding. Net income was
adjusted by preferred dividends declared and paid during April 1996.
There was no change in the average number of outstanding common shares
from December 31, 1995, and there was no dilution of common stock
because the preferred stock is not convertible to common stock before
January 1, 2000. The calculation of earnings per share for the three
and nine month periods ended September 30, 1996 is based upon the
following information:
Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1996
------------- ------------
$ 29,520 $ 216,520
Net income
Dividends applicable to Convertible
Series A,
6% cumulative preferred stock - (43,971)
------------- ------------
$ 29,520 $ 172,549
============ ============
NOTE 4 - INCOME TAXES
The provision for income taxes for the period ended September 30, 1996
is as follows:
Federal income taxes currently payable (refundable) $ 176,297
Deferred federal income taxes 58,000
------------
$ 234,297
============
NOTE 5 - REINSURANCE
The Company's financial statements reflect the effects of ceded
reinsurance transactions. The Company does not assume reinsurance in
the ordinary course of business. However, effective November 30, 1995,
the Company, in a transaction approved by the Florida Department of
Insurance, assumed the insurance assets and liabilities of Associated
Business & Commerce Workers' Compensation Self - Insurance Fund, the
Company's predecessor (the "Fund"), by virtue of a loss portfolio
("LPT") transaction. The excess of premium received over losses assumed
was treated as deferred LPT premium on the balance sheet.
The deferred LPT premium is earned in the ratio of assumed losses paid
to total assumed losses. Deferred LPT premium earned for the period
ended September 30, 1996 totaled $324,513.
-9-
<PAGE>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
UNAUDITED
NOTE 5 - REINSURANCE (CONTINUED)
Ceded reinsurance involves transferring certain risks the Company has
underwritten to other insurance companies who agree to share these
risks. The primary purpose of ceded reinsurance is to protect the
Company from potential losses in excess of the amount it is prepared to
accept.
The Company expects those with whom it has ceded reinsurance to honor
their obligations. In the event these companies are unable to honor
their obligations, the Company will pay the shortfall.
The following table summarizes the effect of reinsurance on premiums
earned and insurance losses and loss adjustment expenses for the period
ended September 30, 1996:
Premiums earned:
Direct $ 21,587,766
Ceded (15,099,101)
-------------
Net premiums earned $ 6,488,665
=============
Insurance losses and loss adjustment expenses:
Direct $ 12,789,849
Ceded (8,947,466)
-------------
Net insurance losses $ 3,842,383
=============
NOTE 6 - LEGAL PROCEEDINGS
From time to time, the Company may be involved in workers' compensation
proceedings relating to claims arising out of its operations in the
normal course of business. As of the filing date of this report, the
Company is not party to any legal proceedings outside of its ordinary
workers compensation settlement business which management believes
would materially affect the financial position or operations of the
Company with the exception of the matter described below.
-10-
<PAGE>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
UNAUDITED
NOTE 6 - LEGAL PROCEEDINGS (CONTINUED)
In July, 1992, the Fund filed a lawsuit in the State Circuit Court of
Palm Beach County, Florida, for breach of contract against Advanced
Risk Management Incorporated ("ARMI") claiming damages for excess fees
and advances collected by ARMI, the former service company of the Fund.
A counterclaim was filed by ARMI alleging breach of contract, breach of
fiduciary duty and fraud. On January 2, 1994, the court granted summary
judgment in favor of the Fund with respect to all of the counterclaims
made by ARMI. The summary judgment was appealed by ARMI and reversed by
the Fourth District Court of Appeal, which remanded the matter back to
the trial court to resolve specific issues. On December 15, 1995 the
trial court granted the Fund's renewed motion for summary judgment.
ARMI has filed an appeal as to this judgment as well. The Fund intends
to continue to pursue and defend this claim on its own behalf. There
can be no assurance however, that, in the event of an unfavorable
ruling against the Fund, recovery would not be sought from the Company.
In the event there is an unfavorable outcome, which management believes
to be unlikely, the Fund's liability is estimated at less than
$1,000,000.
NOTE 7 - RELATED PARTY TRANSACTIONS
All of the Company's outstanding common stock as well as all of the
outstanding Series B preferred stock are owned by the Company's parent,
Associated Business & Commerce Holdings, Inc. ("Holdings"). Holdings
was organized in March 1995 for the purpose of providing financing and
performing certain management services for the Company under a
management agreement. All common stock and Series B preferred stock
have been pledged as collateral against a note payable issued by
Holdings.
The note payable of Holdings was issued to the Company's quota share
reinsurer, Underwriters Reinsurance Company ("Underwriters"). The loan
bears interest at 12.75% per annum, and, if not prepaid, is due on
December 31, 2001. Holdings expects to repay the loan from fees paid by
the Company under a management agreement.
Holdings renegotiated the loan agreement with Underwriters during the
second quarter of 1996 to eliminate any debt service payment
requirements for the balance of 1996 and through March of 1997. In
addition, Underwriters agreed to re-loan all then paid principal on the
note of approximately $162,400. As a result of these arrangements,
Holdings reduced the management fee charged the Company, dollar for
dollar, and agreed to refund $162,400 of such fees paid through the
first quarter when received by Holdings.
-11
<PAGE>
ASSOCIATED BUSINESS & COMMERCE INSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
UNAUDITED
NOTE 7 - RELATED PARTY TRANSACTIONS (CONTINUED)
The terms of the management agreement call for a fee of 14.1% of the
Company's written premium to be paid to Holdings in return for Holdings
performing certain administrative functions and for paying certain
costs on behalf of the Company. Through September 30, 1996, management
fees payable pursuant to the agreement would have approximated
$3,045,000. The effect of the temporary revision described above,
through September 30, reduced management fees payable to $2,751,000.
Policy acquisition and other underwriting expenses reflected in the
statement of operations for the period ended September 30, 1996 are net
of $3,734,463 in ceding commissions paid to the Company by
Underwriters.
The advances receivable at September 30, 1996 of $344,692 represents
working capital advances to Holdings and are non - interest bearing.
$162,400 of the advance is attributable to the reduced management fee
to Holdings, which will be repaid upon Holdings receipt of the
principal refund from Underwriters.
NOTE 8 - STOCKHOLDERS' EQUITY
On May 2, 1996, the Company's Board of Directors adopted an amendment
to its articles of incorporation to increase the number of authorized
shares of 6% Cumulative Convertible Preferred Stock, Series A, from
900,000 to 1,900,000.
-12-
<PAGE>
ASSOCIATED BUSINESS & COMMERCE
INSURANCE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1996
RESULTS OF OPERATIONS
The Company is reporting income before taxes for the first three quarters of
1996 of $216,000 based on gross premium volume of $21,600,000. Annualized
premium as of September 30, 1996 amounts to approximately $28,800,000 or a
slight increase in the calendar year 1995 amount of $27,900,000. As discussed in
the Company's Form 10-K for 1995, certain insureds elected not to renew their
coverage with the Company effective January 1, 1996, which management perceived
as being the result of increased competition generated by favorable 1993
legislative changes and also the late date in 1995 that the Company completed
its plan to announce the availability of non-assessable insurance coverage.
Since the Form 10-K was prepared and filed, the Company has written new business
which has resulted in a restoration to 1995 writing levels. The adjustments to
premium pricing and availability factors as discussed in the Form 10-K have
resulted in a greater portion of submissions being accepted by potential
customers. Although writings have been restored to 1995 levels, leading
management to be optimistic regarding the Company's 1996 writings, the
adjustments to budgeted expenditures made by management in response to the
reduction of January 1, 1996 renewals remain in place, to be modified only to
the extent required by increasing premium volume.
As a result of the full absorption of the Company's 70% quota-share
arrangements, earned premiums ceded for reinsurance (including excess loss
re-insurance) amounts to 69.9% of earned premium. Loss and operating expense
ratios are effected somewhat by the ceding of premium in comparison to 1995's
ratios during which the quota-share treaty was only in effect for the last
quarter of the year.
For the first three quarters of 1996, the loss and loss expense ratio is 59.2%
and the expense ratio is 43.9% or a combined ratio of 103.1%. The investment
ratio (interest and investment earnings divided by net earned premium) amounted
to 10.0% through the third quarter resulting in an overall operating ratio of
93.1%. Included within the statement of operations is recognition of deferred
gain on the loss portfolio transfer transaction between the Company and the Fund
of approximately $325,000. Without the recognition of this gain, the Company
would have recorded operating income before income taxes of approximately
$126,000.
For the nine months ended September 30, 1995, the Fund reported earned premium
of approximately $20,600,000 and income before taxes of approximately $187,000
in its unaudited financial statements. The Fund was not a party to any
quota-share reinsurance treaty during that period nor was any management
agreement in effect as is the case with the Company for 1996. Policy acquisition
and other underwriting expenses for the Company for the first quarter included
approximately $144,000 of amounts paid to Holdings which were utilized by
Holdings for debt service on its loan from Underwriters. However, based upon
Holdings renegotiating the terms of its note payable to Underwriters, no amount
of the management fee was used for debt service during the second or third
quarters.
As discussed above and in Note 7 to the financial statements, management fees
payable by the Company to Holdings through September 30, 1996 have been reduced
by approximately $300,000 attributable to Holdings reduced debt service payment
requirements on its loan from Underwriters.
<PAGE>
ASSOCIATED BUSINESS & COMMERCE
INSURANCE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1996
LIQUIDITY AND CAPITAL RESOURCES
As was anticipated and described in the Company's Form 10-K, cash flows from
operating activities for the first three quarters were a negative $4,200,000.
This was anticipated because of the Company's quota-share arrangements with
Underwriters. Such negative cash flows from operations were offset by proceeds
from investment maturities, sales and other investment activities realizing cash
flows of approximately $4,600,000 and from proceeds from the issuance of
additional Series A preferred stock of approximately $251,000 resulting in an
overall increase in cash and cash equivalents for the nine months ended
September 30, 1996 of approximately $69,000.
Invested assets reduced from $14,400,000 at the end of 1995 to $9,800,000 as of
September 30, 1996 with an increase in cash of approximately $69,000. Negative
cash flows from operations are expected to continue throughout 1996 as funding
of the quota-share recoverables continues by virtue of the transfer of premium
to the quota-share reinsurer pursuant to the quota-share treaty. As claims are
settled and paid in the future, management anticipates that such negative flows
will eventually reverse or stabilize as reimbursements due from the reinsurer
for claims paid and other reimbursements for operating expenses equal or exceed
premiums due pursuant to the treaty.
On a statutory basis, the Company is reporting statutory surplus of
approximately $5,400,000 and statutory net income of $750,000 for the nine
months ended September 30, 1996. Based upon the Company's current writings,
required statutory surplus is the minimum of $4,000,000, pursuant to Florida's
Insurance Code.
<PAGE>
ASSOCIATED BUSINESS & COMMERCE
INSURANCE CORPORATION
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no significant developments in those matters discussed in Item 3
of the Company's Form 10-K for 1995.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The board of directors of the Company declared the dividend of $.30 payable on
October 1, 1996 on the 6% Cumulative Preferred Stock, Series A. The total amount
of such arrearage on the date of filing of this report is $74,080. However, the
dividend remains unpaid as of November 14, 1996 pending approval by the Florida
Department of Insurance. If the Department of Insurance does not approve the
October 1 dividend, it will accrue.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) EXHIBIT INDEX Exhibit 27 Financial Data Schedule
b) Reports on Form 8-K - The Company filed no reports on Form 8-K during the
quarter ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASSOCIATED BUSINESS & COMMERCE INSURANCE
CORPORATION REGISTRANT
Date: November 14, 1996 /s/ JAMES R. NAU
--------------------------------
James R. Nau
President
Date: November 14, 1996 /s/ CLIFFORD G. MERRITT
----------------------------------
Clifford G. Merritt
Vice President, Finance
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE UANUDITED BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 2,358,739
<DEBT-CARRYING-VALUE> 7,393,157
<DEBT-MARKET-VALUE> 7,081,413
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 9,751,896
<CASH> 2,311,149
<RECOVER-REINSURE> 403,700
<DEFERRED-ACQUISITION> 412,544
<TOTAL-ASSETS> 39,098,658
<POLICY-LOSSES> 25,612,542
<UNEARNED-PREMIUMS> 3,056,013
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
5,669,350
<COMMON> 102,501
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 39,098,658
6,488,665
<INVESTMENT-INCOME> 625,476
<INVESTMENT-GAINS> (24,385)
<OTHER-INCOME> 324,513
<BENEFITS> 3,842,383
<UNDERWRITING-AMORTIZATION> 1,540,712
<UNDERWRITING-OTHER> 1,629,127
<INCOME-PRETAX> 450,817
<INCOME-TAX> 234,297
<INCOME-CONTINUING> 216,520
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216,520
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
<RESERVE-OPEN> 28,306,416
<PROVISION-CURRENT> 3,842,383
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 712,280
<PAYMENTS-PRIOR> 9,209,925
<RESERVE-CLOSE> 25,612,542
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
